These can be significant, such as the cost of ingredients or supplies if running a restaurant or café, or smaller such as the costs of paper and presentation materials if running a consultancy. Materials – The cost of the raw materials used to manufacture or create your product.Variable costs increase the greater the output of your business and decrease when output falls.įor example, if you have a cake-making business, variable costs include buying ingredients and cake materials such as cases and boxes, distribution costs such as delivering cakes to customers, and marketing costs such as advertising in local newspapers. Variable costs vary depending on how many products your business sells. With each fixed cost, try to work out how much the cost will be as both a monthly and an annual sum for your business’s financial year. It’s worth itemising each of these costs on a spreadsheet.
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